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in Ohio Farm Bureau Fedn., Inc. v. Commissioner, 106 T.C. 222,
236 (1996), we suggested that the rationale in Newberry v.
Commissioner, 76 T.C. 441 (1981), supported the holding that
income from a nonsponsorship and noncompetition agreement does
not constitute "unrelated business income" under the definition
of that term in section 512(a). Those cases, however, do not
mandate the conclusion that income received from a covenant not
to compete is per se excluded from the reach of SECA. I think
that the law on that point still may be uncertain. Since that
point is not crucial to my disagreement with the Ninth Circuit, I
shall not pursue it any further. It is sufficient to me that, on
the facts as I understand them, the payments were made pursuant
to a business contract that served no purpose other than to
define both the consideration for and other aspects of the
business relationship between petitioner and State Farm.
Lastly, the termination payments in this case are
fundamentally unlike the insurance proceeds in Newberry v.
Commissioner, supra. The payments in Newberry were derived from
an insurance policy that was purchased by the taxpayer in order
to provide him with a substitute for his trade or business income
in the event of a business interruption, such as the catastrophic
fire in that case. The payments took the place of income from
the trade or business and were not themselves income from that
business. In this case, the termination payments were derived
from a trade or business carried on by petitioner.
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